As it shuttered stores and decreased operating hours due to the coronavirus pandemic, Lululemon Athletica said, direct-to-consumer (DTC) net revenue jumped 68 percent for the first quarter of fiscal 2020. The activewear company reported gross margin of 51.3 percent, which marked a 260 basis point decline compared to the same quarter the previous year, according to an announcement.
CEO Calvin McDonald said in the announcement, “I'm proud of how Lululemon has navigated these unexpected and unprecedented times. We are learning more every day about our guests — how they enjoy interacting with us online and what makes them comfortable as stores reopen."
McDonald continued, "Our strong digital business demonstrates the strength of our guest connection and the long-term opportunity to create further Omni experiences going forward."
All of the brand’s stores in Europe, North America and some Asia Pacific nations were shuttered for much of the quarter. But the company started opening retail locations again in those markets “in line with the guidance from local authorities” after May 3, per the announcement. Almost 300 – or 295 – of its company-operated retail locations were open as of June 10.
Lululemon said its stores and distribution facilities are running with procedures implemented such as physical distancing, decreased operating hours, maximum occupancy levels and bolstered sanitation as well as cleaning.
The company had $823 million in cash and cash equivalents as of May 3 and a $398.2 million capacity under its "committed revolving credit facility."
Lululemon reported $652 million in net revenue, which was 17 percent less than the first quarter of fiscal 2019, and that "diluted earnings per share were $0.22, compared to $0.74 in the first quarter of fiscal 2019."
In separate news, digital demand for American Eagle Outfitters, Inc. grew in Q1, which was fueled by brand health as well as strong shopper engagement. The company reported an 33 percent rise in sales and that inventory liquidation as well as shuttering of stores had a sizable impact on the firm’s first quarter results.